Monday, February 20, 2012

IRS Offers Voluntary Program for Employers Misclassifying Employees to Come Forward and Avoid Hefty Fines and Penalties

The Internal Revenue Service (IRS) is offering an interesting program to employers who are misclassifying employees as independent contractors to come forward and avoid interest and penalties while making "minimal payments" in unpaid payroll taxes.  The program, the Voluntary Classification Settlement Program (VCSP), has some employers reluctant to come forward as they do not know if the IRS will share the information with other government agencies who may slam them for other penalties and law violations but he IRS has issued an FAQ sheet. The FAQ resolved three key fears for employers:
  • The IRS states that it will not share information about VCSP applicants with the Department of Labor or state agencies;
  • An employer that applies for but is not accepted into the VCSP will not automatically be subject to an IRS audit; and
  • Participation in the VCSP is not an admission of liability or wrongdoing with respect to employee classification issues.

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